Category: New Health Care Law

New research from the Commonwealth Fund, a pro-Obamacare think tank, shows that health insurers are doing just fine under Obamacare.

Well, the stock market has been telling us that for years. The report’s purpose is to cheer the rebates that insurers which made too much money paid to consumers. Obamacare regulates the Medical Loss Ratio (MLR). If an insurer does not spend enough premium on medical claims, it has to pay a rebate to its beneficiaries.

Rebates have collapsed from over $1 billion in 2011 to $325 million in 2013. The report concludes that Obamacare caused insurers to reduce their overhead expenses and profits. Actually, there is less to this story than meets the eye. Exhibit 5 shows that there has been very little change in insurers’ income statements over the three years.

Obamacare includes a “health insurance providers fee” that is significantly increasing premiums. The fee is a fixed-dollar amount that is divvied up among insurers according to the amount of premium they write.

People who are really getting hit by this fee include Medicare Advantage beneficiaries who are enrolled in through retiree benefits. Because their former employers pay a share of their premium, the insurance fee has a disproportionate impact.

One reader sent me correspondence from his former employer’s HR department explaining why premiums are going up. In 2011, he paid $32.81 per month for both himself and his wife. In 2012 and 2013, the premium was $42.93. In 2014, it jumped up to $121.03, and $138.93 this year.

According the HR department, $40 (per person) of the 2014 increase was due to the fee, and $8-$10 of the 2015 increase:

Well, the total increase in premium for 2014 was $78.10. So, we can conclude that the increase was entirely accounted for by the fee. Indeed, their premium would have gone down a couple of bucks, if not for the fee. The same is true for the 2015 increase.

Premiums almost tripled, for the sole purpose of funding Obamacare. No wonder seniors want this repealed and replaced.

During the first year public health exchanges existed, Prime Therapeutics’ (Prime) members who enrolled in plans on these exchanges filled an average of 11.7 prescriptions, exceeding fills by commercial members by 13.6 percent. Public exchange members were also 2.5 times more likely to have hepatitis C or HIV, driving an almost 200 percent higher spend on related medicines.

More specifically, nearly $1 out of every $5 spent on drugs for public exchange members was spent to treat hepatitis C or HIV.

The report also states that exchange beneficiaries are significantly older than commercially insured persons: 42.6 years versus 34.7 years old, on average. 28 percent of Obamacare beneficiaries were between 55 and 64 years old, versus only 16 percent of commercially insured persons.

For years now, Wall Street has cheered as Obamacare fuelled the stock prices of corporations in the healthcare industry. One of them was eHealth, Inc., a private health-insurance exchange that was founded in 1997.

Obamacare is crushing agents and brokers, according to industry sources:

Amid the national debate over raising the federal minimum wage to $10 per hour, Scott Leavitt of Boise says he and his fellow advisors have been enrolling clients in their state’s health insurance exchange for an hourly wage that works out to about $4.50 – and sometimes even less. (Susan Rupe, InsuranceNewsNet)

And that is just the advisors. The same article also reports results from neutral or pro-Obamacare organizations like HealthPocket, Kaiser Family Foundation, and the Commonwealth Fund to show how much pain Obamacare is causing patients: Deductibles too high, premiums too expensive, and he whole shebang unaffordable.

One of this blog’s consistent themes is that Obamacare incentivizes insurers to attract the healthy and shun the sick. Pattie Curran is a North Carolina mother of two children born with a rare bone-marrow dysfunction. She reported her experience in the Washington Times:

The co-pay for a medication that protects my youngest son’s kidneys from damage had been $131 for a three-month supply for five to six years before the law passed. In 2011, the medication suddenly more than doubled. We watched in horror as it skyrocketed to $532 by the middle of 2013, while at the same time trying to get a medical-necessity exception. Obamacare not only made everything less affordable, it created more work for families and providers. We have witnessed a corresponding decrease in quality of care because of the extra administrative demands placed on physicians and their staff.

During the past month, some of our sons’ most important medications have been discontinued from coverage altogether.

This is a tragic, but not surprising outcome of a system that gives politicians the power to allocate medical resources. They will allocate them such that the majority of healthy people get “free” “preventive” care, while the truly sick pay the price.

The Congressional Budget Office’s March budget baseline updates its estimates of costs and insurance coverage due to Obamacare. The March baseline estimates that the gross cost of Obamacare’s subsidies and Medicaid spending for the years 2016 through 2025 will be $1.7 trillion, $286 billion less than it had estimated in the January baseline.

The CBO calculates a so-called “net cost” by subtracting revenues from businesses and individuals paying the mandate/fine/penalty/tax for not buying Obamacare, the “Cadillac tax” on high-cost health cost insurance, and the effect of changes in taxable compensation. This net cost has shrunk by $142 billion to $1,207 billion.

Even more impressive are the reductions in the cost of Obamacare from the CBO’s original March 2010 score of Obamacare. The two estimates overlap for the seven years, 2015 through 2021. The original estimate was that Obamacare’s gross cost would be $1.4 trillion over the period, and the net cost $1 trillion. These have shrunk to $992 billion and $751 billion, reductions of 28 percent and 29 percent.

When the CBO issues a new baseline, it updates its estimate of Obamacare’s insurance provisions. What it does not do is update its estimate of revenues from the host of other taxes in the Affordable Care Act, such as the medical-device excise tax.

So, it is not immediately obvious that Obamacare’s shrinking cost estimates should open the door to cutting some of those harmful taxes – which they should.

Gallup has released a teaser for its quarterly update of health-insurance coverage. Although the polling firm released only one datum (that the rate of uninsured fell to 12.3 percent in the first quarter from 12.9 percent in the fourth quarter of 2014) this was enough for President Obama to send forth a victory tweet.

Not so fast: As the press release itself notes, a large proportion of the newly “insured” are not actually insured, but on Medicaid. Medicaid is a welfare program. Consider the question: “Do you have health insurance coverage?” It is as if people receiving cash welfare payments answered the question, “Do you have a job?” in the affirmative.

Tomorrow is the day the Supreme Court hears oral arguments in King vs. Burwell, and all the talk is about what Congress will do if the Supreme Court directs the Administration to obey the law by not paying subsidies in the majority of states, which have declined to establish their own Obamacare exchanges and defaulted to the federal one.

The Wall Street Journal ran an op-ed (available by subscription) by John Kline, Paul Ryan, and Fred Upton, who chair committees of jurisdiction in the House of Representatives that will be tasked with proposing a Congressional response to this decision. Here’s what they write:

Let people buy insurance across state lines. Stop frivolous lawsuits by enacting medical-liability reform. Let small businesses band together so they get a fair deal from insurance companies.

January’s Personal Income and Outlays report from the Bureau of Economic Analysis shows how significant Obamacare’s subsidies are in the scheme of government transfer payments to households, accounting for 21 percent of the increase in government transfer payments in January:

Personal current transfer receipts increased $24.8 billion in January, compared with an increase of $13.8 billion in December. The January estimates of current transfer receipts reflected several special factors…… Other government social benefits to persons was boosted $5.3 billion, primarily reflecting health insurance premium subsidies paid in the form of tax credits to enrollees of the Affordable Care Act exchanges.